Climate Change and Managed Ecosystems - Chapter 19 potx

Attention is focused on the feasibility of terrestrial carbon sinks to slow the rate of CO2 buildup in the atmosphere.1 I also examine the results of several empirical studies into the c

Part IV

Economics and Policy Issues

and Agricultural

Carbon Sinks

G.C van Kooten

CONTENTS

19.1 Introduction 375

19.2 Economic Instruments to Address Climate Change and the Kyoto Protocol Mechanism 376

19.3 Terrestrial Carbon Sinks: Issues 378

19.3.1 Additionality, Monitoring, and Leakages 379

19.3.2 Discounting Physical Carbon 381

19.3.3 Credit Trading 382

19.3.4 The Ephemeral Nature of Sinks 384

19.4 Prognosis for Forest Ecosystem Sinks 387

19.5 Prognosis for Agricultural Sinks 388

19.6 Conclusions 392

References 393

19.1 INTRODUCTION

As a result of the Kyoto Protocol (KP) and its so-called “flexibility mechanisms,” climate change and mechanisms to mitigate its potential effects have attracted con-siderable economic and policy attention A major reason for this attention is that the

KP has a complex set of instruments that enable countries to achieve emissions reduction targets in a wide variety of ways, some of which are unlikely to lead to real, long-term reductions in greenhouse gas emissions One purpose of this chapter, therefore, is to provide an overview of economic reasoning applied to climate change and to illustrate how terrestrial carbon uptake credits (offset credits) operate within the KP framework Attention is focused on the feasibility of terrestrial carbon sinks

to slow the rate of CO2 buildup in the atmosphere.1

I also examine the results of several empirical studies into the costs of carbon uptake in agricultural ecosystems and by forestry activities For example, Manley

et al.2 examined the costs of creating soil carbon sinks by switching from conven-tional to zero tillage The viability of agricultural carbon sinks was found to vary

by region and crop, with no-till representing a low-cost option in some regions (costs

of less than $15 tC–1), but a high-cost option in others (costs of $100 to $400 tC–1)

A particularly relevant finding is that no-till cultivation may store no carbon at all

if measurements are taken at sufficient depth In some circumstances no-till vation may yield a “triple dividend” of carbon storage, increased returns, and reducedsoil erosion, but in many others creating carbon offset credits in agricultural soils

culti-is not cost-effective because reduced tillage practices store little or no carbon Thculti-is

is particularly the case in the Great Plains In another study, van Kooten3 reviewedestimates from 55 studies of the costs of creating carbon offsets using forestry.Lowest costs of sequestering carbon are through forest conservation, while treeplanting and agroforestry activities increase costs by more than 200% The use ofmarginal cost estimates instead of average cost results in much higher costs forcarbon sequestration, in the range of thousands of dollars tC–1, although few studiesused this more appropriate method of cost assessment

I conclude by making the case that, while there remains a great potential forcarbon sinks, more attention needs to be paid to post-harvest In the above research,post-harvest storage of carbon in wood products yielded much lower cost estimates.Nonetheless, the study of post-harvest uses of biomass remains an area that requiresgreater attention by economists

19.2 ECONOMIC INSTRUMENTS TO ADDRESS

CLIMATE CHANGE AND THE KYOTO

PROTOCOL MECHANISM

Economists generally prefer economic incentives over command-and-control lation, because market incentives are usually better suited to achieving environmentalobjectives at lower cost than government regulations In the context of climatechange, economic incentives induce firms to adopt technical changes that lower thecosts of reducing CO2 emissions, because they can then sell permits or avoid buyingthem, or avoid paying a tax Further, market instruments provide incentives to changeproducts, processes, and so on, as marginal costs and benefits change over time.Because firms are always trying to avoid the tax or paying for emission rights, theytend to respond quickly to technological change

regu-Whether a quantity or price instrument is chosen should not matter This can beillustrated with the aid of Figure 19.1 Restricting the amount of CO2 emissions(focusing on quantity) should lead to the same outcome as an emissions tax (focusing

on price) The carbon tax (P in Figure 19.1) determines the level of emissions; if emissions are restricted to C* and permits are issued in that amount, the permit price should be P, or the same as the tax The state can choose the tax level (price) or the

number of emission permits (quantity), but if all is known the outcome will be the

same — emissions will be reduced to C*.

When abatement costs and/or benefits are uncertain, however, picking a carbontax can lead to the “wrong” level of emissions reduction, while choosing a quantitycan result in a mistake about the forecasted price that firms will have to pay forauctioned permits.4 Such errors have social costs If the marginal cost of abatement

curve is relatively steep but the marginal benefit of abatement rather flat (i.e.,damages accumulate slowly), as is likely to be the case with climate change, thecosts of relying on permit trading are much higher than those associated with carbontaxes.4–6 However, as discussed below, the KP relies neither on taxes nor pureemissions trading.

Regardless of how emissions are curtailed, doing so creates a wedge betweenthe marginal costs of providing emission permits (which are effectively zero) andthe price at which they sell in the market This wedge is a form of scarcity rent,7with the total unearned rent equal to the restricted level of emissions multiplied bytheir price (Figure 19.1) The rent represents the capitalized value of the right toemit CO2, which had previously been free With a tax, the government captures therent With a tradable emissions scheme, the government captures the rent only ifemission rights are auctioned off; if emission rights are grandfathered (given toemitters on the basis of current emissions, say), the rent is captured by extantemitters Those lucky enough to receive tradable emission permits experience awindfall As a result, governments will be subject to tremendous lobbying pressure

in their decision regarding the allocation of permits Countries that have done themost to reduce emissions in the past may lose relative to ones that made no similarefforts; firms that are high-energy users may benefit relative to those firms thatinvested in energy-savings technology

FIGURE 19.1 Controlling CO2 emissions using economic incentives.

Marginal benefit of (demand for) emitting CO2

Level of emissions (Mt C)

Notice that the rent constitutes an income transfer and not a cost to society ofreducing emissions The authority can distribute the rent any way it sees fit by themethod it chooses to allocate emission rights It can even distribute the rent in waysthat provide certain emitters with windfalls not provided to other emitters, if this iswhat is needed to make the scheme more palatable However, it can do little aboutthe costs of reducing CO2-equivalent emissions Costs are given in Figure 19.1 bythe triangle labeled “deadweight loss,” which might be considered the minimum

cost to society of achieving the emissions target C* Costs may well be higher if

the wrong policies are implemented In any event, it is this cost that needs to be

compared to the benefits of achieving C*.

Contrary to the acid rain case (SO2 emissions from power plants) where emissiontrading enjoyed great success, the marginal costs of achieving a specified emissionsreduction target are not well known Thus, some economists favor a carbon tax toensure that costs do not spin wildly out of control Yet, the international community,fascinated perhaps by the success in reducing SO2 emissions, opted for a quantityinstrument Two types of quantity instrument are available: permit (allowance)trading and credit trading They are not the same thing, and I review the merits ofeach and discuss their implications with respect to carbon sinks

Under permit trading (also known as allowance trading), the authority establishes

an aggregate emissions cap (say, C* in Figure 19.1) and issues emission allowances

(permits) of that amount for use and/or trading This is euphemistically known as

“cap and trade.” Under credit trading, each large industrial emitter (each major

source of emissions) is required to meet an emissions target that is usually but notnecessarily set below current emissions The current level of emissions is oftenreferred to as the “baseline.” Emission reductions in excess of the prespecified target(reductions in excess of baseline minus target emissions) can be certified as tradablecredits However, other types of credits can also be certified at the discretion of theauthority Importantly, there is no overall cap on emissions and, hence, no guaranteethat emissions will not exceed the target

The Kyoto process began with emission reduction targets and only afterwardsconsidered instruments for implementation Taxes were rejected as politically infea-sible and difficult to coordinate, although individual countries could employ taxes

as they saw fit However, most countries opted not to rely on taxes; for example,Canada’s implementation plan makes no mention of taxes whatsoever Rather thanmake the effort to “sell” citizens on the notion of carbon taxes, perhaps by reducingincome taxes and demonstrating the benefits of the so-called “double-dividend,”8,9countries opted for a hodgepodge of means for meeting targets that included possi-bilities for credit trading Credit trading of emissions and carbon offsets (e.g., carbonsequestration in sinks as permitted under KP Articles 3.3, 3.4, and 3.7) is seen as amethod of achieving KP targets cheaply and efficiently, and individual countries areencouraging the establishment of emission trading schemes that include offsets

19.3 TERRESTRIAL CARBON SINKS: ISSUES

Land use, land-use change, and forestry (LULUCF) activities can lead to carbonoffset credits or debits Such offsets have taken on great importance under the KP

despite the EU-15’s initial opposition to their inclusion As a result, carbon offsetsneed to be taken into account in any credit trading scheme The Marrakech Accords

to the KP lay out the basic framework for including offset credits.10 Tree plantingand activities that enhance tree growth clearly remove carbon from the atmosphereand store it in biomass, and thus should be eligible activities for creating carbonoffset credits However, since most countries have not embarked on large-scaleafforestation and/or reforestation projects in the past decade, harvesting trees duringthe 5-year KP commitment period (2008–2012) will cause them to have a debit onthe afforestation-reforestation-deforestation (ARD) account Therefore, the Mar-rakech Accords permit countries, in the first commitment period only, to offset up

to 9.0 megatons of carbon (Mt C) each year from 2008–2012 through (verified)forest management activities that enhance carbon uptake (although the amount ofcarbon sequestered is not verified) If there is no ARD debit, then a country cannotclaim the credit In addition, some countries are able to claim carbon credits frombusiness-as-usual forest management that need not be offset against ARD debits.Canada can claim 12 Mt C year–1, the Russian Federation 33 Mt C, Japan 13 Mt C,and other countries much lesser amounts These are simply “paper” claims as there

is no new net removal of CO2 from the atmosphere

In addition to forest ecosystem sinks, agricultural activities that lead to enhancedsoil organic carbon and/or more carbon stored in biomass can be used to claim offsetcredits Included are revegetation (establishment of vegetation that does not meetthe definitions of afforestation and reforestation), cropland management (greater use

of conservation tillage, more set-asides) and grazing management (manipulation ofthe amount and type of vegetation and livestock produced)

One problem with agricultural and to a lesser extent forestry carbon sequestrationactivities is their ephemeral nature One study found, for example, that all of thesoil organic carbon stored as a result of 20 years of conservation tillage was released

in a single year of conventional tillage.11 Likewise, there is concern that tree tations will release a substantial amount of their stored carbon once harvested, whichcould happen as soon as 5 years after first planting due to the use of fast-growinghybrid species Payments that promote direct changes in land uses for the purpose

plan-of carbon sequestration plan-often result in indirect changes in land use that release CO2,something known as a “leakage.” Further, carbon flux from LULUCF activities isextremely difficult to measure and monitor over time, increasing the transactioncosts of providing carbon offset credits Despite these obstacles, many scientistsremain optimistic about the importance of terrestrial carbon sinks.12

In this section, I examine some issues related to the inclusion of carbon offsetcredits in a larger emissions trading scheme Some of these issues are related to thetrading scheme itself, but others relate to the costs and benefits of creating offsets

— the economic efficiency of relying on carbon sink offsets rather than CO2emissions reduction

-19.3.1 A DDITIONALITY , M ONITORING , AND L EAKAGES

In principle, a country should get credit only for carbon uptake over and abovewhat occurs in the absence of carbon-uptake incentives, a condition known as

“additionality.”13 Thus, for example, if it can be demonstrated that a forest would

be harvested and converted to another use in the absence of specific policy toprevent this from happening, the additionality condition is met Carbon sequestered

as a result of incremental forest management activities (e.g., juvenile spacing,commercial thinning, fire control, fertilization) would be eligible for carbon cred-its, but only if the activities would not otherwise have been undertaken (say, toprovide higher returns or maintain market share) Similarly, afforestation projectsare additional if they provide environmental benefits (e.g., regulation of water flowand quality, wildlife habitat) not captured by the landowner and would not beundertaken in the absence of economic carbon incentives

It is often difficult to determine whether an activity is truly additional Forexample, farmers have increasingly adopted conservation tillage practices becausecosts of controlling weeds (chemical costs) have fallen, fuel and certain machinerycosts have risen, and new cultivars reduce the impact of yield reductions oftenassociated with conservation tillage If farmers adopt conservation tillage practices

in the absence of specific payments for carbon uptake, they should not be providedwith carbon offset credits If zero tillage is adopted simply because it is profitable

to do so, the additionality condition is not satisfied and no carbon credits can beclaimed Likewise, farmers who have planted shelterbelts should not be providedcarbon subsidies unless it can be demonstrated that such shelterbelts are planted forthe purpose of sequestering carbon and would not otherwise have been planted

In addition to determining whether a LULUCF project is indeed additional, it

is necessary to determine how much carbon is actually sequestered and for howlong Measuring carbon uptake is a difficult task and can be even more difficult ifthe carbon sink is short-lived Monitoring and enforcement are costly and measure-ment is an inexact science in the case of carbon uptake in terrestrial ecosystems.Research studies reporting differences in soil organic carbon (SOC) between con-ventional and conservation tillage practices find that these depend on soil type, depth

to which soil carbon is measured, and other factors.2 But if SOC needs to beconstantly measured and monitored, as appears likely for ephemeral sinks (seebelow), transaction costs could greatly exceed the value of the carbon sequestered.*The onus of establishing whether or not certain agricultural practices or treeplanting (forest management) programs should receive carbon offset credits extendsbeyond simply examining the direct LULUCF impact The direct impact relates tothe carbon flux at the site in question The indirect impact refers to the changes in

CO2 emissions elsewhere that are brought about by the LULUCF activity In ticular, there may be leakages caused by changes/shifts in land use elsewhere and/orchanges in emissions, and these need to be set against the direct impacts Large-scale tree planting programs in Canada, for example, might reduce future lumberprices, thereby causing U.S forest landowners to harvest trees sooner, or convertland from forestry to agriculture, in anticipation of falling stumpage prices (see, forexample, Reference 15) This causes an increase in CO2 emissions that needs to beoffset against the gain in carbon uptake from the original afforestation project

par-* Little research has been done on estimating transaction costs, although a study by van Kooten, Shaikh, and Suchánek 14 demonstrates that they can be a serious obstacle to adoption of tree planting programs.

Likewise, subsidies to stimulate ethanol production will increase grain prices,thereby providing an impetus to convert land from forest to agriculture at theextensive margin and to increase use of chemical and fuel inputs that emit CO2-equivalent gases at the intensive margin Further, as Lewandrowski et al.11 note,payments to get a landowner to adopt no tillage on one field may be accompanied

by the conversion of another field from zero to conventional tillage by the samelandowner Such leakages could substantially offset a project’s direct gains in carbonuptake They also increase the costs of creating carbon offset credits, making themless attractive relative to emission reduction credits

19.3.2 D ISCOUNTING P HYSICAL C ARBON

By discounting carbon, we acknowledge that it matters when CO2 emissions orcarbon uptake occurs — carbon sequestered today is more important and has greaterpotential benefits than that sequestered at some future time Yet, the idea of dis-counting physical carbon is anathema to many who would discount only monetaryvalues But the idea of weighting physical units accruing at different times isentrenched in the natural resource economics literature, going back to economists’definitions of conservation and depletion.16 One cannot obtain consistent estimates

of the costs of carbon uptake unless both project costs and physical carbon arediscounted, even if different rates of discount are employed for costs and carbon

To illustrate why, consider the following example

Suppose a tree-planting project results in the reduction of CO2-equivalent sions of 1 tC yr–1 in perpetuity (e.g., biomass burning to produce energy previouslyproduced using fossil fuels) In addition, the project has a permanent sink componentthat results in the storage of 6 tC yr–1 for 10 years, after which time the sinkcomponent of the project reaches an equilibrium How much carbon is stored? Ifall costs and uptake are put on an annual basis, we need to determine how muchcarbon is actually sequestered per year? Is it 1 or 7 tC yr–1? Clearly, 7 tC aresequestered for the first 10 years, but only 1 tC is sequestered annually after thattime Carbon sequestration, as stated on an annual basis, would either be thatexperienced in the first 10 years (7 tC yr–1) or in the infinite number of years tofollow (1 tC yr–1) Suppose the discounted project costs amount to $1000; theseinclude the initial site preparation and planting costs plus any annual costs (main-tenance, monitoring, etc), appropriately discounted to the current period If a 4%rate of discount is used, costs are $40 yr–1 — the amount that, if occurring each year

emis-in perpetuity, equals $1000 emis-in the current period The costs of carbon uptake arethen estimated to be $5.71 tC–1 if it is assumed that 7 tC is sequestered annuallyand $40 tC–1 if 1 tC is assumed to be sequestered each year The former figure might

be cited simply to make the project appear more desirable than it really is.Suppose instead we intend to divide the $1000 cost by the total undiscountedsum of carbon that the project sequesters Since the amount of carbon sequestered

is 7 tC yr–1 for 10 years, followed by 1 tC yr–1 in perpetuity, the total carbon absorbed

is infinite, and the cost of carbon uptake would essentially be zero To avoid aninfinite sum of carbon uptake, an arbitrary planning horizon needs to be chosen Ifthe planning horizon is 30 years, 90 tC are sequestered and the average cost is

calculated to be $11.11 tC–1; if a 40-year planning horizon is chosen, 100 tC areremoved from the atmosphere and the cost is $10.00 tC–1 Thus, cost estimates aresensitive to the length of the planning horizon, which is not always made explicit

in studies

Consistent cost estimates that take into account all carbon sequestered plus thetiming of uptake can only be achieved by discounting both costs and physical carbon.Suppose physical carbon is discounted at a lower rate (say, 2%) than that used todiscount costs (4%) Then, over an infinite time horizon, the total discounted carbonsaved via our hypothetical project amounts to 112.88 tC and the correct estimate ofcosts is $8.86 tC–1 Reliance on annualized values is misleading in this case becausecosts and carbon are discounted at different rates If carbon is annualized using a2% rate, costs amount to $17.70 tC–1 (=$40 ÷ 2.26 tC) If the same discount rate of4% is employed for costs and carbon, the cost is $30.20 tC–1 (or $8.24 tCO2–1) and

it is the same regardless of whether costs and carbon are annualized

The rate at which physical carbon should be discounted depends on what weassume about the rate at which the damages caused by CO2 emissions increase overtime.17,18 If the damage function is linear so that marginal damages are constant —damages per unit of emissions remain the same as the concentration of atmospheric

CO2 increases — then the present value of reductions in the stock of atmospheric

CO2 declines at the social rate of discount Hence, it is appropriate to discount futurecarbon uptake at the social rate of discount “The more rapidly marginal damagesincrease, the less future carbon emissions reductions should be discounted” (Refer-ence 18, p 291) Thus, use of a zero discount rate for physical carbon is tantamount

to assuming that, as the concentration of atmospheric CO2 increases, the damageper unit of CO2 emissions increases at the same rate as the social rate of discount

— an exponential damage function with damages growing at the same rate as thesocial rate of discount A zero discount rate on physical carbon implies that there

is no difference between removing a unit of carbon from the atmosphere today,tomorrow, or at some future time; logically, then, it does not matter if the carbon isever removed from the atmosphere The point is that use of any rate of discountdepends on what is assumed about the marginal damages from further CO2 emissions

or carbon removals

The effect of discounting physical carbon is to increase the costs of creatingcarbon offset credits because discounting effectively results in “less carbon” attrib-utable to a project Discounting financial outlays, on the other hand, reduces thecost of creating carbon offsets Because most outlays occur early on in the life of aforest project, costs of creating carbon offsets are not as sensitive to the discountrate used for costs as to the discount rate used for carbon

19.3.3 C REDIT T RADING

Perhaps the most important market-based initiative with respect to terrestrialcarbon sinks is the establishment of the exchange-traded markets for carbon uptakecredits Through exchange landowners could potentially profit from practices thatenhance SOC or carbon in vegetation But studies indicate that this will require

a well-functioning design mechanism for implementing carbon trading Indeed,

emission trading schemes fail not because of a lack of interest, but from a down in necessary economic and market conditions, such as imperfect informationand high transactions costs The Chicago Climate Exchange (CCX) was launchedearly in 2003 as the first North American central market exchange to allow trading

break-of CO2 emissions between industry and agriculture Its purpose is to provide pricediscovery, which will clarify the debate about the costs of emissions reductionand the role of carbon sinks Carbon sequestration through no-till farming, grassand tree plantings, and other methods will enable farmers to sell carbon credits

on the CCX However, the prices that are “discovered” may not reflect the truecosts to society because the CCX is a credit trading scheme as opposed to anallowance trading scheme.19

Trading is also possible through CO2e.com, a U.K exchange for carbon sion offsets that began in April 2002 and subsequently went global.* Initially, itprovided a market for emissions trading for British firms that held agreements tocut emissions under the U.K.’s climate change levy scheme, for which they receivetax rebates on energy use Companies failing to meet targets are able to buy credits

emis-to offset their above-target emissions Companies participating in the exchange arehedging their exposure to losing a tax rebate on energy use As a result, by mid-July 2003, carbon was trading for as much as U.S.$10.50 tCO2–1, with transactionsizes in the range of 5,000 to 15,000 tonnes

CO2e.com now functions as an exchange for trading CERs from Joint mentation and Clean Development Mechanism projects, and carbon offset activ-ities Countries and firms can purchase (sell) CERs and removal units (carbonoffsets) for delivery in 2010 Trades for delivery in 2010 have been occurring ataround U.S.$4.50 to $5.50 tCO2–1, with trades involving 2 to 10 Mt CO2 Notsurprisingly, Canada has thus far been the largest buyer as a result of its commit-ment to domestic large industrial emitters that they would not have to pay morethan $C15.00 tCO2–1 for reducing emissions CO2e.com also anticipates that itwill be able to arrange trades in carbon offsets through the emissions exchangenewly established by the European Union.** It is not clear, however, how theexchange rate between sink offsets and emission reductions will be established(see below)

Imple-A number of other traders in carbon credits can be found on the Internet,including eCarbontrade (www.ecarbontrade.com/ECIAbout.htm), the Kefi-exchange

begun in Alberta by traders with experience in the trading of various commoditieson-line, including electricity However, a CO2 emissions-trading market appears topresent a greater challenge As pointed out on the Kefi-Exchange Web site:

The on-going uncertainty of the global endorsement of the Kyoto Protocol has left the future of the KEFI Exchange in limbo.… [T]he actual operation of the exchange cannot

* Discussion of CO2e.com is based on http://www.co2e.com/trading/MarketHistory.asp (viewed 7 July 2004).

** See http://europa.eu.int/comm/environment/climat/emission.htm (viewed 7 July 2004).

(http://www.kefi-exchange.com/), and CleanAir Canada (ada.org), which is government backed The Kefi-Exchange is a private exchange

http://www.cleanaircan-proceed without some clarity in the regulation of emissions As a result of the current stalemate, the KEFI Exchange has opted to move to a “stand down” mode pending a clearer determination of the directions to be taken in Alberta and the rest of Canada

in respect to emission reductions *

Commodity markets, such as the Winnipeg Commodity Exchange, are alsolooking into trading carbon emissions and carbon sink credits With all the problems,

it is not surprising that trades are few and far between, especially those that involvecarbon offsets Indeed, Australian solicitors McKean & Park, who were asked tomake a judgment on the proposed Australian trading system, indicate that any trading

in carbon credits is unlikely to occur before 2005 Tietenberg et al.20 also indicatethat there are a significant number of obstacles to overcome before trading can occur,including most importantly a means of verifying emission-reduction and carbonsequestration claims

Clearly, a market-based approach to carbon sinks will be effective only in thepresence of certain market conditions For example, in order to buy and sell carbonoffset credits, it is necessary to have legislation that delineates the rights of land-owners, owners of trees, and owners of carbon, because what any one of these partiesdoes affects the amount of carbon that is sequestered and stored Without clearlegislation, buyers of carbon offsets are not assured that they will get proper credit

— their claims to have met their emission reduction targets with carbon credits isopen to dispute Carbon offsets need to be certified, and an overseeing (international)agency with well-defined rules and regulations is needed It would appear that,currently, those participating in the few exchanges that have been established aredoing so despite the risk that carbon offset credits may not deliver because of theirephemeral nature

19.3.4 T HE E PHEMERAL N ATURE OF S INKS

Compared to not emitting CO2 from a fossil fuel source, terrestrial sequestration

of carbon is unlikely to be permanent.** Kyoto is in the process of developingpolicy for addressing the nonpermanence of terrestrial carbon uptake Somenations want emissions and removals to be treated identically, so that the removal

of a unit of carbon results in a credit just as does a reduction in emissions Does

it matter whether the “removal” from the atmosphere is the result of biologicalsequestration or a consequence of leaving a CO2-equivalent unit of fossil fuel inthe ground? Some argue that leaving fossil fuels in the ground only delays theireventual use and, as with carbon sequestered in a terrestrial sink, results in thesame obligation for the future.17 Others argue that there is an asymmetry betweencarbon uptake in a sink and emissions reduction (leaving fossil fuel in the

* This quote was originally viewed on 8 May 2003, but had been removed as of 7 July 2004 This is a telling observation about the difficulty of establishing exchanges that take carbon offset trading seriously.

** This is not to suggest that carbon sinks are not worthwhile Temporary removal of carbon helps postpone climate change, buys time for technological progress, buys time to replace fuel-inefficient capital equip- ment, allows time for learning, and may lead to some permanent sequestration as the new land use continues indefinitely 21